Monday, May 22, 2017

Automation update - brick making machine!

Brick making employs around 10 million of the poorest people in India, making it one of the biggest single occupational types. And what do we have in India, a country with abundant labour supply and limited productive employment opportunities - a brick making machine that can make 300 bricks a minute!
Yes, work conditions in brick making make it like "modern day slavery". But what is the alternative for these poorest of poor employed in brick making?

Now consider the public debate. If software industry with just 3.5 million of well-off workers, a major part of India's private sector induced middle-class, faces a strengthening rupee or threats from artificial intelligence etc, there are public debates about what should be done. Government and the Reserve Bank of India gets blamed for not doing enough to retain the exchange rate competitiveness or promoting AI.  

Here you have an intervention that threatens to gradually eliminate the livelihoods of three times that many workers, arguably among the poorest of the poor. And it gets nary a mention in the media. What's more (if you see the comments here), it is held out as an example of India's progress! The only people who are likely to stand up for them are (hopefully) the political representatives from those areas worst affected by such labour displacement. I therefore am not always unsympathetic to some of the political decisions that are often decried as statist or not progressive. Government of India's policy to slow down the pace of liberalisation and easing FDI in retail is a case in point. 

One can be rest assured that the brick-laying machine has critical components which are imported, with the imports enjoying concessional tariffs. And the manufacturing enterprise making the machine benefits enormously from capital investment subsidies, and fiscal and input subsidies. In other words, public policy is subsidizing interventions that displace labour. And if the brick laying unit is in the formal sector, with workers having mandatory wage deductions, then public policy would be penalising labour!

Yes, I can hear that. I am no Luddite. Neither am an apologist for the liberal/progressive order. The creeping automation does concern me. I also acknowledge that policies or human restraints can only delay the inevitable. But staying back and letting things take its course does not look the most advisable option for me. And buying time helps in deepening growth and enabling the gradual process of adjustment, that may be the best public policy can do.

The story that such technologies improve overall productivity, raise incomes, and create new jobs to accommodate the displaced comes with several bells and whistles. For one, if Industrial Revolution is any indicator, incomes can actually keep going down for several years. And even if the story holds in the aggregate, itself debatable given evidence from industries about displacement and new job generation, there are likely to be large pockets of losers. Anyways, it is most unlikely that these illiterate and poorest of poor brick workers could get retrained and acquire another job.

Too many of such struggling voices have been marginalised in mainstream debates on public issues. It is of course a reflection of the capture of the progressive/liberal order by those who benefit from it. But, as Brexit and Trump shows, such marginalisation happens at a prohibitive cost. You sow the wind and reap the whirlwind! 

No comments: